August 9, 2008

Putting oil in wrong tank adds fuel to this warning

A decision of the Ontario Superior Court earlier this year provides a
valuable lesson to property owners whose homes were once heated with fuel
oil.

Back in 1979, Mary and Francis Bingley decided to replace their old oil
furnace and convert their heating system to natural gas.

They hired Stanzel Plumbing to perform the work and remove the oil furnace.
For reasons nobody seems to remember almost 30 years later, the basement oil
tank was left in place, along with the exterior oil fill pipe and the vent
pipe.

Donald Stanzel tightened the cap on the oil fill pipe so it could not be
removed by hand. He then bent the pipe down towards the ground to prevent it
from being filled and to indicate that it was no longer to be used.

One day in 2001, 22 years later, John McDougall was making the rounds with
his tanker truck, delivering furnace oil to various homes in the town of Smith
Falls. As an employee of Morrison Fuels, he had been trained and certified for
the transport and delivery of fuel oil.

On his 10th or 11th delivery of the day, he unfortunately misread a delivery
ticket for a house on William St., thinking it said Russell St. In a hurry to
complete the delivery at the house on Russell St., he missed a number of warning
signs on the ticket and the house itself.

McDougall brought out a wrench, banged the cap loose, and straightened the
pipe so he could pump fuel into it.

After he had pumped 933.4 litres of furnace oil into the wrong house, he
looked at the delivery ticket and realized his mistake.

The old oil fill pipe was still connected to the tank in the basement, but
unfortunately that tank had leaks. Even worse, the basement floor consisted of
large exposed blocks of bedrock with vertical and horizontal soil seams. When
the oil was pumped into the tank, it leaked onto the basement floor where it
entered the soil and the groundwater.

The house was immediately rendered uninhabitable and serious environmental
contamination occurred. Extensive remediation efforts have taken place since
2001, and are ongoing.

Total cost to date for the environmental cleanup is more than $767,000.

The Bingleys sued Morrison Fuels, which admitted negligence and reached a
settlement with the homeowners on damages. That settlement did not, however, end
the litigation.

Morrison Fuels brought a third party claim against Stanzel Plumbing, alleging
that the Bingleys' damages were caused in part by the negligent actions of
Stanzel when it failed to remove or permanently plug the fill pipes at the time
the oil furnace was removed.

The trial of the third party action took place over four days earlier this
year before Justice Lynn Ratushny.

After hearing the evidence, the judge ruled that Stanzel's decommissioning
work in 1979 complied with the gas installation Code at the time. (It has since
been changed to require removal of the fill pipes and tank.)

She wrote in her judgment that the old system was left in a "safe and secure"
condition, and that Stanzel Plumbing could not reasonably have foreseen that an
unauthorized fuel delivery would be made into the tightened and turned-down
pipe.

The case against Stanzel Plumbing was dismissed and in a subsequent ruling,
it was awarded $53,000 in costs against Morrison Fuels.

The lesson of the case is clear: If you have an old oil fill pipe or storage
tank it should be removed immediately. Having your basement filled with fuel oil
can ruin your whole day.

[1]
At issue in this case is whether damages caused by the
defendants wrongful pumping of fuel oil into a home were caused in part
by negligent actions of the third parties when they converted the
plaintiffs heating system from fuel oil to gas and did not remove or
permanently plug the fuel oil system s exterior pipes.

[2]
The defendants ( Morrison Fuels ) have admitted their
negligence, reached agreement with the plaintiffs (the homeowners ) on
damages and now claim contributory negligence and apportionment of damages
from the third parties ( Stanzel Plumbing ).

The Facts

[3]
The facts are quite simple.

[4]
In 1979, the homeowners decided to have their old oil furnace
removed and to convert their heating system to natural gas. They hired
Stanzel Plumbing to perform this work. Stanzel Plumbing removed the
homeowners oil furnace. According to its practice at the time if the
customer chose this less costly option and for reasons not remembered by
either the homeowners or Stanzel Plumbing, the oil tank was left in the
basement. The two exterior oil heating system pipes, the oil fill pipe
and the vent pipe, were also left in place. Stanzel Plumbing tightened
the cap on the oil fill pipe so that it could not be taken off by hand and
then turned this pipe down towards the ground to prevent it being filled
in this position and to indicate that it was no longer to be used.

[5]
Twenty-two years later in March 2001, John McDougall was
delivering furnace oil to various residences in his hometown. He had been
working for Morrison Fuels for just over two months. Fuel oil deliveries
are deliveries of dangerous goods and regulations were in place to
safeguard their handling. John McDougall had been trained and certified
for their transport and delivery. He had finished delivering furnace oil
to 86 Russell Street in the Town of Smiths Falls which had been his tenth
or eleventh delivery of the day. He was in a hurry. He had more
deliveries to make that day.

[6]
He grabbed one of his remaining delivery tickets and thought
he saw the address 38 Russell Street. It actually said 38 William Street.
He had always mixed up those two street names and today was no different.
He only concentrated on the number 38 on the ticket.

[7]
If he had read any of the other information on the ticket
aside from the number 38, he would have seen a number of indicators to
warn him that he was not at the right place. He would have seen that the
exterior vent and oil fill pipes were supposed to be at a different corner
of the house than where he found them at 38 Russell Street. He would have
noticed, and this was highlighted on the ticket because it was unusual
and, presumably, warranted extra care to avoid overfilling the customer s
oil tank, that there was no whistle in the vent pipe to indicate the oil
tank had air, and, therefore, space in it to receive oil. He was,
instead, to have listened at the vent pipe at the correct address for a
gurgle to tell him when the system was full. He also would have seen the
indication on the ticket that the expected delivery amount was to be
around 560 litres.

[8]
He did not know any of this. He simply hurried to complete
his delivery at number 38. He didn t check to make sure he was at the
right address. He found the homeowners old oil fill pipe in a downward
position with its cap end pointing to the ground at approximately a 45
degree angle. It was not an uncommon occurrence that homes in the Smiths
Falls area using gas still had their old oil heating system pipes attached
to their exteriors. He had seen similar bent over exterior pipes in the
town before, but he did not know and had not been trained as to their
significance. He simply thought this oil fill pipe was loose.

[9]
He had trouble getting the cap off of the oil fill pipe and
moving the pipe into more of an upright position to be able to fill it,
but he managed with the help of a wrench that he retrieved from his truck,
banging the cap loose and moving the pipe to a 45 degree angle pointing
the opposite way from its position when he first saw it. He began his
pumping and heard the usual whistle sound from the vent pipe, usually
indicative of air coming out of the oil tank and pipes. After he thought
the filling process had taken longer than he expected, he returned to his
truck to turn off the pump. It was only then that he looked at the
delivery ticket for a second time and saw that he was at the wrong home.
He had pumped 933.4 litres of furnace oil into the wrong residence.

[10]
That wrong residence belonged to the homeowners. They had never
been customers of Morrison Fuels even when they had been heating with
oil. They weren t home at the time. Their old oil fill pipe had clearly
been in a downward position, perhaps with its cap just one inch away from
the ground surface, for as long as Francis Bingley, one of the homeowners,
could remember ever since he had organized their conversion to gas in
1979. His wife, Mary Bingley, was less sure of its downward position.

[11]
John McDougall had pumped the furnace oil into the old oil fill
pipe that was still connected in some fashion to the homeowners old oil
tank in the basement. Unfortunately, that tank had leaks. Even more
unfortunately, the basement surface consisted of exposed large blocks of
bedrock with vertical and horizontal soil seams. When the oil was pumped
into the tank, it was discharged through the leaks and onto the basement
surface where it entered the soil and the groundwater.

[12]
The house was rendered uninhabitable and serious environmental
contamination occurred. Extensive remediation efforts have taken place
since 2001 and are ongoing, at a total cost to date for the environmental
clean-up portion of more than $767,000.00.

Duty of Care and
Standard of Care

[13]
There is no issue that a duty of care was owed by Morrison Fuels
to the homeowners on the day of the delivery of the furnace oil and that
its proper performance was not met by Morrison Fuels, resulting in damages
caused by its negligence.

[14]
I do not understand that Morrison Fuels claims the existence of
any duty of care owed by Stanzel Plumbing to it or to anyone else who
might come onto the homeowners property on any day subsequent to the 1979
conversion work including on that delivery day.

[15]
There is also no issue, I do not believe, that there was also a
separate duty of care owed by Stanzel Plumbing to the homeowners in 1979
to perform the conversion work safely, including the decommissioning of
the old fuel oil heating system.

[16]
The only issue is the measurement of the standard of care expected
of Stanzel Plumbing in 1979 for this decommissioning and whether Stanzel
Plumbing met the proper performance of its standard of care to the
homeowners. If it did not, it was negligent and Morrison Fuels claims
that the damages caused by its own mistaken furnace oil delivery were
contributed to by Stanzel Plumbing s negligence.

[17]
The relevant regulatory provision governing conversion from oil to
gas heating systems in 1979 in Ontario was section 3.3.3 of the
Canadian Gas Association Installation Code for Natural Gas Burning
Appliances and Equipment, CGA B149.1-1976 (the Code ):

3.3.3 When the installation of an appliance
constitutes a conversion from another form of energy including oil, gas,
propane and electricity it shall be the responsibility of the installer to
ensure that the means of supply of the other form of energy has either
been removed or left safe and secure from accidental discharge.

[18]
Evidence at trial has established that while the Code
changed in 1982 in Ontario to require removal or plugging of the oil fill
pipe when converting to gas, it was not uncommon in 2001 for homeowners in
the Smiths Falls area who were using gas, to still have their old oil fill
and vent pipes attached to the exterior of their homes with the fill pipes
left in a turned down position.

[19]
Donald Stanzel, the owner of Stanzel Plumbing, could not remember
the work he had performed in 1979 for the homeowners. He testified,
however, that it was his practice in the 1970s to give his customers a
choice as to how much of the old oil heating system they wished to pay for
to have removed. He said usually the tank and filler pipe were removed
but that the Code allowed other options including the option of
leaving either of them in place provided they were left safe and secure
from accidental discharge as stated in the Code. When customers
chose to leave them in place, his practice was to leave the vent pipe in
its upright position because it could never be filled with oil, but the
fill pipe would have its cap tightened so it could not be turned by hand
and the pipe would be turned pointing to the ground, usually in a 90
degree position.

[20]
Donald Stanzel said he believed this tightening of the cap and
turning down of the fill pipe complied with the Code requirement
that the old system be left safe and secure from accidental discharge
and the intention of this measure was to give oil delivery persons the
message that they should be asking questions before putting oil in through
that pipe. He had never before heard of a problem with this procedure.

[21]
Francis Bingley, one of the homeowners, also could not remember
very much about the conversion work in 1979 and the reason for the choices
he had made in his discussions with Stanzel Plumbing, except that the
leftover oil tank, fill pipe and vent pipe, were never an issue for him.
He testified that after the conversion, the top of the fill pipe with its
cap attached had always been pointing in a very downward direction toward
the ground and it had never moved from its downward direction to his
knowledge. He was never told to move or remove it.

[22]
There is no disagreement from the evidence at trial that the
better conversion method, especially with the benefit of hindsight, would
have been to remove or plug the fill pipe to prevent any possibility of
oil going into that pipe and that these options would not have incurred
too many extra costs.

[23]
The issue is how to measure the proper performance of the standard
of care owed by Stanzel Plumbing to the homeowners for the decommissioning
work performed in 1979.

[24]
I have relied, in particular, on certain passages from Ryan v.
Victoria (City),
1999 CanLII 706 (S.C.C.), [1999] 1 S.C.R. 201 (S.C.C.) where Major J.
reviewed the existence of a duty of care owed by railways and the standard
of care, being the content of that duty of care, required for the proper
exercise of the duty. He said, at paras. 28 and 29,

Conduct is negligent if it creates an
objectively unreasonable risk of harm. To avoid liability, a person must
exercise the standard of care that would be expected of an ordinary,
reasonable and prudent person in the same circumstances. The measure of
what is reasonable depends on the facts of each case, including the
likelihood of a known or foreseeable harm, the gravity of that harm, and
the burden or cost which would be incurred to prevent the injury. In
addition, one may look to external indicators of reasonable conduct, such
as custom, industry practice, and statutory or regulatory standards.

Legislative standards are relevant to the
common law standard of care, but the two are not necessarily
co-extensive. The fact that a statute prescribes or prohibits certain
activities may constitute evidence of reasonable conduct in a given
situation, but it does not extinguish the underlying obligation of
reasonableness. See Saskatchewan Wheat Pool v. Canada,
1983 CanLII 21 (S.C.C.), [1983] 1 S.C.R. 205 (S.C.C.). Thus, a
statutory breach does not automatically give rise to civil liability; it
is merely some evidence of negligence. See, e.g. Stewart v. Pettie,
1995 CanLII 147 (S.C.C.), [1995] 1 S.C.R. 131 (S.C.C.), at para. 36,
and Saskatchewan Wheat Pool, at p. 225. By the same token, mere
compliance with a statute does not, in and of itself, preclude a finding
of civil liability. See Linden, supra, at p. 219. Statutory
standards can, however, be highly relevant to the assessment of reasonable
conduct in a particular case, and in fact may render reasonable an act or
omission which would otherwise appear to be negligent. This allows courts
to consider the legislative framework in which people and companies must
operate, while at the same time recognizing that one cannot avoid the
underlying obligation of reasonable care simply by discharging statutory
duties.

[25]
In Ryan, supra, Major J. considered whether the
railways in that case were liable in negligence to a member of the public
crossing their tracks even though they had been statutorily compliant
regarding those tracks and the long-standing common law rule had been that
the standard of care owed by railways to the public was normally limited
to the discharge of statutory obligations. He found, summarizing his
conclusions at para. 58, that the duty of care owed by railways to the
public was not replaced or exhausted by compliance with regulatory
standards and that duty required them to exercise reasonable care in all
of the circumstances that went beyond regulatory compliance.

[26]
In considering the issue of fault despite compliance with
regulations, he said the following at paras. 39 and 40:

The weight to be accorded to statutory
compliance in the overall assessment of reasonableness depends on the
nature of the statute and the circumstances of the case. It should be
determined whether the legislative standards are necessarily applicable to
the facts of the case. Statutory compliance will have more relevance in
ordinary cases i.e., cases clearly within the intended scope of the
statute than in cases involving special or unusual circumstances It
should also be determined whether the legislative standards are specific
or general, and whether they allow for discretion in the manner of
performance. It is a well-established principle that an action will lie
against any party, public or private, for doing that which the
legislature has authorized, if it be done negligently It follows that a
party acting under statutory authority must still take such precautions as
are reasonable within the range of that authority to minimize the risk
which may result from its actions

Where a statute authorizes certain
activities and strictly defines the manner of performance and the
precautions to be taken, it is more likely to be found that compliance
with the statute constitutes reasonable care and that no additional
measures are required. By contrast, where a statute is general or permits
discretion as to the manner of performance, or where unusual circumstances
exist which are not clearly within the scope of the statute, mere
compliance is unlikely to exhaust the standard of care.

[27]
For Stanzel Plumbing, the question, then, to be asked is what
would have been the standard of care expected of an ordinary, reasonable
and prudent person in the same circumstances, having regard to the
likelihood of a known or reasonably foreseeable harm, the gravity of that
harm, the burden or cost which would be incurred to prevent the harm,
industry practice and regulatory standards.

Analysis

[28]
I am satisfied from the evidence of Donald Stanzel and the expert
witness, John Butler, that in the 1970s before the Code was
changed, one of the industry practices in decommissioning an oil fuel
heating system and if the old oil tank and piping was not to be removed,
was to turn down the oil fill pipe to the ground to signal to any fuel
delivery person that he was not to move it or he would loosen the supply
system and cause a leak.

[29]
Donald Stanzel did not state, as was submitted he did, that he
continued to turn down oil fill pipes during subsequent decommissioning
work for his customers even after the Code was changed and in
violation of the Code. He simply stated that this was his practice
around 1979.

[30]
There is no disagreement, as stated before, that the better
decommissioning method would have been to remove or plug the oil fill
pipe. Shawn Morrison, the general manager of Morrison Fuels, testified
that this has been his company s practice since the 1970s and that their
customers had never had a choice. Oil tanks and the pipes were always
removed as part of a conversion to gas performed by Morrison Fuels. He
was also aware, however, that others performed their decommissioning work
differently, including by turning the oil fill pipe down. He said it is
not uncommon at the present time to see homes in Smiths Falls that are on
gas with oil fill pipes left outside and turned down. He agreed that with
this knowledge, it was important that furnace oil delivery persons
understand what this configuration meant. Unfortunately, John McDougall
did not.

[31]
I find that Stanzel Plumbing s decommissioning work for the
homeowners, notwithstanding that the best or even the better option was
not chosen by either of them as is now obvious with the benefit of
hindsight, was compliant with the Code at the time. The Code
allowed the installer his choice as to how to leave the old system safe
and secure from accidental discharge . In 1979, Stanzel Plumbing did
leave the old system safe and secure for the homeowners within the
ordinary meaning of those terms, from accidental discharge when it
tightened the cap so it could not be manually taken off, and pointed the
oil fill pipe as close as possible to the ground where it could not be
filled. I accept, as Mr. Butler said, that an ordinary meaning of safe
is to keep free from hazard and that an ordinary meaning of secure is
not to have access.

[32]
Because the Code in 1979 permitted discretion as to the
manner of performance, mere compliance, as stated in Ryan,
supra, does not necessarily exhaust the assessment of the proper
standard of care to be exercised. It is at this stage of the analysis
that the objective risk of harm also has to be considered, namely, the
standard of care that would be expected of an ordinary, reasonable and
prudent person in the circumstances, including the reasonable
foreseeability of the harm.

[33]
Those circumstances are the following. In 1979, industry practice
that was Code compliant allowed for tightly capped and turned down
oil fill pipes as part of a decommissioning method. The homeowners were
able to choose this method and did. Stanzel Plumbing heard of no problem
associated with this method. In 2001 a fuel oil delivery was made by a
man who, having been trained in the safe handling of dangerous goods
ignored the most basic safety rule from his training that the fuel was to
be delivered to the right address. He never checked to see if he had the
right address. He had not been trained as to the significance of
down-turned oil fill pipes within his delivery area. Nothing about the
state of the residence that he should have noticed had he read the
delivery ticket or known of the significance of those down-turned oil fill
pipes, served to give him any warning that not only was he at the wrong
place, but that place had no fuel oil heating system. He did not ask any
questions of his office when he noticed the down-turned pipe and its very
tight cap, even though that option was easily available to him through the
use of his two-way phone. He did not seem to understand that moving an
oil fill pipe as much as he did, even if this had been at a home that used
furnace oil, could cause leaks in the piping system.

[34]
The duty of care and the proper performance of its content was an
obligation that Stanzel Plumbing owed to the homeowners in 1979. It was
not a duty of care that extended to Morrison Fuels or to any other furnace
oil delivery company, to save them from making an egregious mistake in the
face of all indications to the contrary and delivering furnace oil to a
place with no oil furnace.

[35]
In terms of the objective and reasonable foreseeability of this
kind of harm, I cannot find that an ordinary, reasonable and prudent
tradesperson in 1979 who is aware of and who complies with the Code
and whose choice of measures is concurred in by the homeowners would
reasonably foresee this kind and degree of mistake and negligence by
someone who had nothing to do with the homeowners.

[36]
In other words, I find that in exercising its standard of care
owed to the homeowners, Stanzel Plumbing could not have reasonably
foreseen that a delivery of fuel oil that was not authorized by anyone and
that was made in the face of many indicators to the contrary would be made
into that tightened and down-turned oil fill pipe.

[37]
If, however, I am wrong and instead, Stanzel Plumbing should have
removed or permanently plugged the oil fill pipe as part of its conversion
work for the homeowners because it created a reasonably foreseeable risk
that there could be a delivery of furnace oil into that oil fill pipe, I
would assess the degree of Stanzel Plumbing s fault or negligence at 5%,
the degree of Morrison Fuels fault at 20% and the degree of John
McDougall s fault at 75%.

[38]
I arrive at this apportionment in the event I am wrong in
concluding no fault by Stanzel Plumbing, by comparing the degree of fault
in the actions and omissions of each of the parties contributing to the
damages. John McDougall s fault is the major contributing cause.
However, Morrison Fuels had not trained him regarding the significance of
those down-turned oil fill pipes that were common within their delivery
area. That is an extra measure of fault Morrison Fuels must take
responsibility for quite apart from its vicarious liability for the
negligence of its employee. I assess Stanzel Plumbing s fault to be far
less of a contributing cause to the damages and set it at 5%.

Conclusions

[39]
I conclude that Stanzel Plumbing by its decommissioning work at
the homeowners residence did not create an objectively unreasonable risk
of harm , to use the language of Major J. in Ryan, supra.

[40]
I find, therefore, that Stanzel Plumbing was not negligent and the
action against the third parties is, therefore, dismissed.

[41]
If there is an issue of costs that the parties cannot agree upon
before February 29, 2008, written submissions (a maximum of 3 written
pages each excluding attachments) can be sent to me before March 10, 2008.

[1]
Written costs submissions have been received from the parties
as a result of the dismissal of Morrison Fuels (the defendants ) action
against the third parties.

[2]
I accept there has been no Rule 49 offer to settle from the
third parties, as the defendants have stated.

[3]
The defendants object to the claimed costs of the third
parties on a number of bases, including that a portion of their counsel s
docketed time is related to the defence of the plaintiffs action that was
settled, that another portion of the docketed time is related to the
separate Hallett action not involving either of the defendants or the
third parties, that was also settled, and that counsel for the third
parties has claimed excessive time and disbursements.

[4]
The defendants submit that for these reasons, the
determination of costs should be referred to an assessment.

[5]
I agree that the third parties are entitled to costs on a
partial indemnity basis.

[6]
I do not agree, however, that an assessment is necessary so as
to fairly achieve the procedural and substantive justice referred to in
Boucher v. Public Accountants Council (Ontario) (2004), 71 O.R. (3d)
29 (Ont. C.A.), at paragraphs 15 and 16.

[7]
As stated in Boucher at paragraph 15, there is a
presumption that costs are to be fixed by the court unless the court is
satisfied that it has before it an exceptional case and the court
exercises its discretion to refer costs for assessment, as allowed by Rule
57.01(3.1).

[8]
The present case is not exceptional with respect to costs. I
am able to fix costs on a reasonable review of the work completed by
counsel for the third parties as set out in their costs submissions,
without the necessity of an assessment. Even if some of that work does
include the cost categories objected to by the defendants, the controlling
parameter enunciated in Boucher, (paras. 26, 37 and 38) of fair
and reasonable for the unsuccessful party to pay responds to those
issues, as do the general principles for the awarding of costs set out in
Rule 57.01(1).

[9]
With respect to the defendants objection that the third
parties awarded costs should only relate to the defence of the third
party claim, this takes too narrow a view of the appropriate scope of that
defence. It was entirely reasonable and, also, necessary that the third
parties made themselves cognizant of the main action as well as of the
separate Hallet action that was to have been tried at the same time. I
accept, therefore, that the costs awarded ought to be primarily, but not
solely, related to the third party defence.

[10]
The defendants submit as an alternative to the assessment process,
that costs of $37,500.00 for fees and $7,500.00 for disbursements would be
fair and equitable, for a total amount of $45,000.00 on a partial
indemnity basis. The third parties had requested from them the payment of
$50,727.25 for fees and $19,597.56 for disbursements, for a total amount
of $70, 324.81, inclusive of GST. However, the third parties request
rested on the existence of a valid Rule 49 offer to settle, which was not
the case.

[11]
The trial took four days to complete. There was a last minute
settlement of the main action and a preceding settlement of the separate
Hallett action. The third parties were required to assess their liability
and adjust their defence according to these other actions, thereby
increasing the amount of counsel time spent that would otherwise have been
reasonable for a four day trial matter. That two of the third parties
witnesses had to incur travel expenses to come from Florida was not
unreasonable, given the interaction and complexity of scheduling arising
out of the multitude of other parties in the other actions.

[12]
In my view, taking into account all of these factors, costs fixed
on a partial indemnity basis in the total amount of $53,000.00 inclusive
of disbursements and GST is a fair and reasonable sum for the defendants
to pay.

[13]
I order, therefore, that the defendants pay costs to the third
parties in the amount of $53,000.00.

Bob Aaron is a Toronto real estate lawyer. He can be reached by email at bob@aaron.ca, phone 416-364-9366 or fax 416-364-3818.Visit the Toronto Star column archives at http://www.aaron.ca/columns for articles on this and other topics or his main webpage at www.aaron.ca.